The Lean Startup - Chapter 8 Pivot (or Persevere)

Monthly burn rate

Net drain on the account balance

We have a remarkable ability to

See the signal in the noise

Startup Runway

remaining cash in the bank divided by the monthly burn rate

channel pivot

same solution is delivered through a different channel, leading to more effective results

zoom in pivot

single feature becomes the whole product

customer need pivot

the target customer has a need worth solving, just not the one that was originally anticipated

engine of growth pivot

A company changes its growth strategy to seek faster or more profitable growth.

technology pivot

Achieve the same solution by using a completely different technology

Pivot

Special kind of change designed to test a new fundamental hypothesis about the product, business model and engine of growth

Pivot

Structured course correction designed to test a new fundamental hypothesis about the product, strategy and engine of growth

business architecture pivot

Change from high margin, low volume to low margin, high volume

value capture pivot

Change in the way the company captures the value it creates

Rationale for building low quality MVP

Developing any features beyond what early adopters require is a form of waste

Purpose of innovation accounting cycle

Testing a clear hypothesis in the service of the company's vision

The Viral Engine of Growth

High referral rate learning to growth without spending significant marketing money

True measure of runway

How many pivots a startup has left: the number of opportunities it has to make a fundamental change to its business strategy

Three primary engines of growth that power startups

The viral, sticky and paid growth models

Failure is

The prerequisite to learning

What is the problem with the notion of shipping a product and then seeing what happens?

You are guaranteed to succeed - at seeing what happens

As soon as you have a handful of customers

You will have five opinions about what to do next

Mainstream customers have ________ requirements and are much more demanding.

different (than early adopters)

Pivots are a permanent fact of life for any growing business...

even after they achieve initial success, it must continue to pivot

customer segment pivot

keeping the functionality of the product the same but changing the audience focus

zoom out pivot

what was considered the whole product becomes a single feature of a much larger product

Reasons why pivots do not happen sooner

1) Vanity metrics can allow entrepreneurs to form false conclusions and live in their own private reality 2)When entrepreneurs have an unclear hypothesis, it is almost impossible to experience complete failure, and without complete failure there is usually no impetus to change 3) Acknowledging failure can lead to dangerously low morale

best way to view a pivot

As a new strategic hypothesis that will require a new minimum viable product to test

Two major business architectures according to Geoffrey Moore

Complex systems model - high margin, low volume Volume operations model - low margin, high volume

Path's goal (this company closed)

Create a more personal social network that maintains its quality over time. Many people have had the experience of being overconnected on social networks. Such broad groups make it difficult to share intimate moments

The overriding challenge that every entrepreneur eventually faces in developing a successful product:

Deciding when to pivot or persevere

Path's launch strategy

Get the product and vision into the market broadly in order to get feedback and begin iteration. Listen to feedback honestly. And continue to innovate in the directions we think will create meaning in the world

the human element of entrepreneurship

Vision, intuition, judgement

Startup productivity is not about cranking out more widgets or features, it is about

aligning our efforts with a business and product that are working to create value and drive growth

platform pivot

change from an application to a platform or vice versa